Friday, October 5, 2012

Learn from a Fool: Mistakes I Almost Made Last Month

I almost made some serious investment mistakes last month.  While reading various analyst's reports, I came across trading BUY calls  for Bumitama Agri and Golden Agri.  In what was an almost rash moment, I was very close to buying into those shares hoping to make a quick buck that just seemed so tempting to resist.  After all, the upside forecasted by the analysts in their target price suggested that I will get a good return on my investment.  And besides, I had also liquidated quite a fair bit of my other shares.

It was good that I was too busy to think much about it over the past weeks and so I did not enter into any positions.  The prices did go up a little and finally slipped due to expected weak crude palm oil prices.  Apparently, there is going to be an oversupply in the near future and palm oil prices are expected to be low in the near future.

It shows that one should not be too quick to jump into investment decisions based on other people's analysis.  At the end of the day, all forecasts and projections are just anyone's guess.  We can make educated guesses but that is what it remains at the end of the day - just an educated guess.

2 comments:

  1. whichever way you look at it, analysts are paid to write what they write.

    Either by the company they are employed for, or by the Buy calls of the "sponsors" who are paying them.

    this is demonstrated in the AA or AAA rating of the rating agencies of those toxic companies and their complex or structural products they are peddling, simply becos the customer is always right, and they are paying your salary.

    And it is also the reason why I seldom read any analyst reports, or if I do come across them, they are more like toilet papers, to be use to wipe the a** after reading.

    No offence to any analyst out there. :)

    ReplyDelete
  2. i too agree with you. We should always do proper analysis & research while doing any investment as these are all based on anyone guesses so there can be more chances of failure we should always listen to educated guesses.

    ReplyDelete

Popular Posts